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| Northern Rock cuts savings deals | Northern Rock cuts savings deals |
| (9 minutes later) | |
| Northern Rock has withdrawn a number of savings deals to new customers to ensure it does not abuse any competitive advantage. | Northern Rock has withdrawn a number of savings deals to new customers to ensure it does not abuse any competitive advantage. |
| The nationalised bank is one of few financial institutions that has a 100% guarantee for the safety of customers' savings, as it is government-backed. | The nationalised bank is one of few financial institutions that has a 100% guarantee for the safety of customers' savings, as it is government-backed. |
| On Thursday, it said that it had seen a "sizeable inflow" of deposits in recent days owing to financial turbulence. | On Thursday, it said that it had seen a "sizeable inflow" of deposits in recent days owing to financial turbulence. |
| It must cap its market share of UK retail deposit balances at 1.5%. | It must cap its market share of UK retail deposit balances at 1.5%. |
| This commitment was made as part of the nationalisation deal. | This commitment was made as part of the nationalisation deal. |
| The move comes as the Irish government confirmed legislation to guarantee the safety of 100% of savings at six institutions. | The move comes as the Irish government confirmed legislation to guarantee the safety of 100% of savings at six institutions. |
| Savings shift | Savings shift |
| There have been widespread reports of savers moving their savings to financial institutions regarded as secure. | There have been widespread reports of savers moving their savings to financial institutions regarded as secure. |
| Each and every government does have an ability to take certain actions themselves, but they must have a look at the broader competitive framework as well Angela Knight, BBA Q&A: Deposit protection scheme class="" href="/1/hi/business/7648554.stm">Reaction to savings shifting | |
| But savers setting up new accounts will generally have to wait a few days before they can put money in. | But savers setting up new accounts will generally have to wait a few days before they can put money in. |
| National Savings & Investments - the government's savings scheme - has a 100% guarantee, in the same way as Northern Rock. | National Savings & Investments - the government's savings scheme - has a 100% guarantee, in the same way as Northern Rock. |
| A spokeswoman for NS&I said its call centre had seen "in increase in volumes of calls" in the last few weeks, but did not provide figures to show the level of the increase. | A spokeswoman for NS&I said its call centre had seen "in increase in volumes of calls" in the last few weeks, but did not provide figures to show the level of the increase. |
| The Anglo Irish Bank said it had received a lot of calls from savers following the Irish government guarantee. | The Anglo Irish Bank said it had received a lot of calls from savers following the Irish government guarantee. |
| There has been a flight by some British savers to the safety of Irish banks BBC business editor Robert Peston Read Robert Peston's blog here | There has been a flight by some British savers to the safety of Irish banks BBC business editor Robert Peston Read Robert Peston's blog here |
| In the UK, only the first £35,000 is guaranteed but Prime Minister Gordon Brown said this was planned to be raised to the first £50,000. | In the UK, only the first £35,000 is guaranteed but Prime Minister Gordon Brown said this was planned to be raised to the first £50,000. |
| Official figures for the flow of money out of accounts on Wednesday is unlikely to be available for another 10 days. | Official figures for the flow of money out of accounts on Wednesday is unlikely to be available for another 10 days. |
| UK payments association Apacs said that no significant peaks had been spotted on transactions through the Chaps transmission service. | UK payments association Apacs said that no significant peaks had been spotted on transactions through the Chaps transmission service. |
| This service allows money to be transferred from one account to another in a day and is generally used for large sums of money. | This service allows money to be transferred from one account to another in a day and is generally used for large sums of money. |
| The system that underpins internet and telephone banking did not show any big spikes either, Apacs said. | The system that underpins internet and telephone banking did not show any big spikes either, Apacs said. |
| Rock cuts | Rock cuts |
| Northern Rock cut its Silver Savings, Silver Savings 30, Business Reserve and a range of fixed rate bonds on Thursday. | Northern Rock cut its Silver Savings, Silver Savings 30, Business Reserve and a range of fixed rate bonds on Thursday. |
| I know it is selfish but I am concerned about what is happening 'Savings switcher' David Roots | I know it is selfish but I am concerned about what is happening 'Savings switcher' David Roots |
| This follows the recent withdrawal of its Fixed Rate Asset Bond and online E-Saver products. | This follows the recent withdrawal of its Fixed Rate Asset Bond and online E-Saver products. |
| "The self-imposed framework is designed to ensure Northern Rock does not take unfair advantage of government support during the period of temporary public ownership," a spokesman said. | "The self-imposed framework is designed to ensure Northern Rock does not take unfair advantage of government support during the period of temporary public ownership," a spokesman said. |
| When it was nationalised, Northern Rock said it would limit its share of retail deposit balances to 1.5% of the market in the UK and 0.8% in Ireland. Its share of gross new mortgage loans would also be no more than 2.5% of the UK market, it said. | When it was nationalised, Northern Rock said it would limit its share of retail deposit balances to 1.5% of the market in the UK and 0.8% in Ireland. Its share of gross new mortgage loans would also be no more than 2.5% of the UK market, it said. |
| A number of media commentators advised savers to turn to Northern Rock at the weekend. Northern Rock does not advertise its 100% guarantee. | A number of media commentators advised savers to turn to Northern Rock at the weekend. Northern Rock does not advertise its 100% guarantee. |
| Moving savings | Moving savings |
| One customer who has decided to move around his savings is retired accountant David Roots, from Somerset. | One customer who has decided to move around his savings is retired accountant David Roots, from Somerset. |
| The 43-year-old had £102,000 saved with ING, £52,000 with Bradford & Bingley and £21,000 in an Isa with Alliance and Leicester. | The 43-year-old had £102,000 saved with ING, £52,000 with Bradford & Bingley and £21,000 in an Isa with Alliance and Leicester. |
| He has decided to keep £35,000 with B&B and A&L owner Santander, another protected £35,000 with ING and the remaining £105,000 with the fully protected Anglo Irish Bank. | He has decided to keep £35,000 with B&B and A&L owner Santander, another protected £35,000 with ING and the remaining £105,000 with the fully protected Anglo Irish Bank. |
| "I know it is selfish but I am concerned about what is happening," he said. | "I know it is selfish but I am concerned about what is happening," he said. |
| "If people move money around then it might destabilise the banking sector, but you have to act for yourself." | "If people move money around then it might destabilise the banking sector, but you have to act for yourself." |
| He called for the UK government to protect 100% of savings, and for more regulation to prevent banks lending beyond their means. | He called for the UK government to protect 100% of savings, and for more regulation to prevent banks lending beyond their means. |
| He is one of relatively few people who have more than £35,000 saved in one account. | He is one of relatively few people who have more than £35,000 saved in one account. |
| Figures from the British Bankers' Association published last year suggest that 4% of the 150 million deposit accounts in the UK had funds in excess of the current guaranteed safety threshold of £35,000. | Figures from the British Bankers' Association published last year suggest that 4% of the 150 million deposit accounts in the UK had funds in excess of the current guaranteed safety threshold of £35,000. |
| Some 2% of these contained funds in excess of £50,000. | Some 2% of these contained funds in excess of £50,000. |
| However, these figures pre-date much of the banking crisis and it is highly likely that many of these savers have since spread these funds among various accounts. | However, these figures pre-date much of the banking crisis and it is highly likely that many of these savers have since spread these funds among various accounts. |
| Small businesses are also covered under the UK scheme for the first £35,000 of deposits. | Small businesses are also covered under the UK scheme for the first £35,000 of deposits. |
| They must satisfy two of the following three criteria: a turnover of not more than £6.5m, a balance sheet total of not more than £3.26m and a total number of employees of not more than 50. | They must satisfy two of the following three criteria: a turnover of not more than £6.5m, a balance sheet total of not more than £3.26m and a total number of employees of not more than 50. |
| Larger businesses are generally excluded from the scheme. | Larger businesses are generally excluded from the scheme. |